IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI)

BEFORE YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 4580/Del/2025 (A.Y 2012-13)

Deputy Commissioner of Income Vs Kanpur Development Tax, CGO Complex, Hapur Authority, Motijheel, Kanpur, Chungi, Ghaziabad, Uttar Pradesh Uttar Pradesh PAN: AAALK0324M Appellant Respondent Assessee by Dr. Rakesh Gupta, Adv& Sh. Somil Aggarwal, Adv Revenue by Ms. Pooja Swaroop, CIT(DR)

Date of Hearing 23/12/2025 Date of Pronouncement 14/01/2026 ORDER PER YOGESH KUMAR, U.S. JM:

The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, (‘Ld. CIT(A)/NFAC’ for short), dated 27/05/2025 pertaining to Assessment Year 2012-13.

2. The grounds of Appeal are as under:-

“1. The Ld. CIT(A) has erred in law and facts for the reason that the Ld. CIT (A) has failed to appreciate correct facts of the case that the the authority is engaged dominantly in the activity of development and sale of properties. Besides, it is observed that the aggregate value of receipts from the activities referred to in the first proviso of section 2 (15) of the Act.

2. The Ld. CIT(A) has erred in law and facts for the reason that the Ld. CI (A) has failed to appreciate correct facts of the case that the assessee does not fulfill the criteria for 'charitable purpose' and its activities cannot be regarded for charitable purposes due to the reason of being the nature of trade or commerce. 3. The Ld. CIT(A) has also failed to appreciate the fact that the AO has rightly disallowed an amount of Rs. 10,97,08,028/-- towards Infrastructure Fund which was directly credited to Infrastructure fund without crediting it to Income & Expenditure account as the same was should be accordance with the government circular which defines the mode of usage of this fund and the method of creation as well.

4. The Ld. CIT(A) has also failed to appreciate the fact that the AO has rightly disallowed claim of payment made to AwasBandhu, Lucknow of Rs. 20,00,000/ as these were directly incurred by the assessee from the balance sheets without crediting in to the Income Account.”

3. Brief facts of the case are that, the Assessee filed return at NIL income. The excess of income over expenditure (surplus) was claimed exempt as per provision of Section 11 and 12 of the Income Tax Act, 1961 ('Act' for short). An assessment order came to be passed u/s 143(3) of the Act on 18/03/2025 at income of Rs. 16,74,21,460/- by making disallowance of the claim of exemption u/s 11 of the Act treating the ‘surplus’ as income from business and made addition on account of infrastructure fund of Rs. 10,97,08,028/- and also disallowed the payment made to Awas Bandhu, Lucknow of Rs. 20,00,000/-. Aggrieved by the assessment order dated 18/03/2015, Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 27/05/2025, allowed the Appeal of the Assessee. As against the order of the Ld. CIT(A) dated 27/05/2025, the Revenue preferred the present appeal on the Grounds mentioned above.

4. The Ld. Departmental Representative vehemently submitted that the Ld. CIT(A) failed to appreciate the fact that the Assessee authority dominantly in the activity of the development and sale of properties, however, erroneously observed that aggregate value of receipts of the activities referred to in the first proviso of Section 2(15) of the Act. Further submitted that, the Ld. CIT(A) failed to appreciate the fact that A.O. has rightly disallowed the claim of payment made to Awas Bandu, Lucknow of Rs. 20,00,000/-as there were directly incurred by the Assessee from the balance sheet without creating into the income account.The Ld. Department's Representative also submitted that the Ld. CIT(A) failed to appreciate the correct facts of the case that the Assessee does not fulfill the criteria of charitable purpose and its activities cannot be regarded for